Saturday, March 14, 2009

Looking a Gift Horse....

Lately, I’ve been doing a lot of grant work. That’s unusual for me. I do teach grant writing and occasionally I critique grants. But it’s been years since I actually spent much time writing and researching grants. It’s been good for me, and good for my students. I feel more confident that I am what I am teaching is current and reality based. Of course, I’ve always had an ace in the hole—a co-teacher who is a director of grants and so lives and breathes the topic.

What is of most interest to me, however, is the fact that so many nonprofits still think first of grants and events when they think of resource development. No matter how many times I tell clients or classes that 76% of all charitable monies come from individuals, no matter how many times they express surprise and say, “wow, we should look in that direction,” most still go back to relying on events and grants. And most of them never quite get out of financial crisis.

On the event side, it’s because no matter what most nonprofits think they net, they haven’t really considered all the true costs. Most importantly, they don’t act on the fact the event itself is not the end of a process, but rather the beginning. If, once the event is over you aren’t individually cultivating every last attendee, you aren’t working an event.

On the grant side, the issues are a more complex. The truth is that most grants are not moneymakers for an organization. Indeed, oftentimes grants cost more than bring in. What grants do best is to provide the wherewithal to implement a program or project that you wouldn’t otherwise be able to start. That’s the good.

The bad and the ugly is that while most funders expect that the project will then become institutionalized, or supported by the organization or other funding mechanisms, that seems to rarely happen. Especially in the case of multi-year, seven figure projects. They grow and sometimes thrive for 3 to 5 years, then as the grant disappears, the pieces get dismantled and it’s as if that program never even existed.

To be sure, there are good grants. Or more to the point, there are organizations that use their grants well. But they are the ones who understand that a grant is not really a gift.

A gift is something that someone gives you without any strings attached--or at least not the kinds that yank back the gift if you don’t do exactly as requested. In the nonprofit world, a gift with strings is called a restricted gift; ones without strings are unrestricted. In the former, the donor says that the gift is to be used for a particular purpose or at a particular time. Most grants are a form of restricted gift, but they go further. Grants have deliverables. And it is these that up the price.

Let’s imagine that some nice person gives me a gift to buy a stove. I cannot use it for a sink, a refrigerator, to go out to dinner. I can only use it for a stove. The gift is restricted. But typically, I can put that money toward whatever stove I want and buy it when I am ready.

If, on the other hand, I get a grant to buy a stove, I can expect that the type and even model of the stove will be proscribed, as will the timeframe in which I have to buy it. The deliverable will be the proof I must supply the grantor that I complied with the restrictions of my grant.

Now let’s say that the grant I request is to fund a cooking course for which I will have to buy a stove. This is a program grant and it is the most typical kind of grant made. Then I will have had to describe exactly how I will be using that stove. I will need to document what I will cook on it, how many people will be using the stove, what the results of what we cook will be. And I will have to track my results and write reports for the grantor.

Some organizations have whole departments dedicated to managing the spending and reporting side of grants. There is nothing wrong with this, except it does add a layer of cost that may be at the expense of the core programs of the organization. Of more concern is that too many organizations contort their missions to meet the requirements of a grant, thus spending more money to do things that don’t always serve their clients well.

Go after grants, sure. They can be an incredible boon to an organization. But make sure that you are looking for funding for a program or project that truly moves your mission forward. Don’t be grant seeking as much as seeking funding for a needed project.

There are, of course, unrestricted (or pretty unrestricted) grants that in effect pay for you to continue doing the good works you are already doing. Those are the best, and as with charitable gifts they are the hardest to get. The one good news of this horrible economy is that more and more foundations are discovering the value of these unrestricted operating grants.

This is good news for well-run nonprofits. My one hope here is that the new deliverable for these unrestricted grants be proof by the organization that it is, indeed, well run and that the clientele served get what is needed in a timely, respectful and helpful way.

If I were given these grants, I’d want to see that there is adequate and trained staff to accomplish the mission and that the staff is appropriately paid. And I’d want to know that the board is engaged, and all members support the organization with their actions and their wallets and not just their mouths. I would also want some proof that the board is strategically overseeing the work of the organization, regularly evaluating the CEO and themselves, and that they understand and follow the laws of nonprofit organizations.